Facade of the Senate of the Philippines building. FILE PHOTO
MANILA, Philippines — Two leading business groups on Sunday expressed support for the Senate ratification of the Regional Comprehensive Economic Partnership (RCEP) mega free-trade deal, arguing that the country cannot afford to be left behind much further.
The Employers Confederation of the Philippines (Ecop) and the American Chamber of Commerce in the Philippines (AmCham), in separate statements, called on the Senate to ratify RCEP, noting that the agreement is already in force in Australia, Brunei, Cambodia, China, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Thailand, and Vietnam.
The Senate is expected to vote on RCEP on Tuesday.
The Philippines is the only country that has not ratified the agreement among the 10 member states of the Association of Southeast Asian Nations (Asean) and its five free-trade agreement (FTA) partners — namely Australia, China, Japan, New Zealand, and South Korea.
AmCham said the Philippine ratification of RCEP will boost the country’s post-pandemic recovery.
“The Philippines cannot afford to leave itself out of the bloc since being a member will harness economic benefits that will hasten economic recovery from the scars, higher debt, and economic damages caused by the COVID-19 pandemic,” it said.
“The chamber believes that the Philippines’ participation in RCEP will boost the country’s competitiveness and will reflect a strong, rules-based economy. This will encourage more foreign direct investments in the country which ultimately translates into more jobs for Filipinos,” the group added.
‘Risks are very minimal’
Ecop president Sergio Ortiz-Luis said that among our Asean neighbors, “we are at the tail end.”
He said ratification by the Senate “will [make] us competitive with others, at least to a certain degree. We can’t afford not to have trade agreements and, at the same time, to not be part of it. Everyone has joined already.”
Ortiz-Luis said doubts about the country’s competitiveness to enter a free-trade deal are misplaced.
“We have lessons in the past, we enter into negotiations without involving the private sector. And by the time we are allowed to take part, there are already promised safeguards, especially in the agriculture sector, that have disappeared, so there are bad lessons,” he said.
“Fortunately, in the case of RCEP, this [has been] widely debated on for a long time, so we are already familiar. And if there are vacuums, these have been filled up, there are safeguards already,” he added.
As to perceived fears about RCEP’s disadvantageous effects on the agricultural sector, the Ecop head said that these have been addressed repeatedly “so the risks are very minimal, if ever.”
“We have waited long enough for this [ratification], and we are very late already. All the others have overtaken us,” Ortiz-Luis said.
Aid to farmers
At a Laging Handa public briefing last week, businessman Jose “Joey” Concepcion III, a member of the Private Sector Advisory Council, said that with President Ferdinand Marcos Jr. as concurrent agriculture secretary, the government will set up programs to protect farmers’ interests and ensure their competitiveness.
“The challenge here is, of course, our agri-micro farmers [who] will have to really step up. And this is an area that is a weak point in the country at this point in time,” he said.
“Of course, RCEP will be more challenging for our farmers. There is no doubt about that. But that is why we have to help scale them up and it is also for the benefit of our consumers. We cannot subsidize the farmers at the expense of consumers. But we have to protect our farmers so that they continue to be competitive. We cannot just leave them out there, because they will fail and go bankrupt, and eventually the economy weakens,” he added.
To help ensure that the farmers will continue to be part of the country’s value chain, he said the private sector will come out with a “big brother approach” to farming whereby farmers will be directly supplied with their needs to boost their productivity.
Concepcion said he supported the ratification of RCEP, noting that “in terms of trading, if we’re not in, we will not be able to trade with all the other [countries] at that level, because certain tariffs will go down.”
Benefits of RCEP
RCEP is a free-trade pact among nations that cover 50.4 percent and 67.3 percent of the Philippines’ export and import markets, respectively, and 58 percent of the country’s sources of foreign investments.
The Philippines was one of 15 signatories to RCEP in November 2020, following almost a decade of deliberations on its merits and provisions. While former President Rodrigo Duterte gave his executive approval the next year, the Senate deferred its ratification after concerns were raised about its impact on the agriculture sector.
This was despite clarifications from the Department of Trade and Industry (DTI) and the National Economic and Development Authority that only 15 agricultural commodities will see lower tariff rates, accounting for just 1.9 percent of total agricultural tariff lines or categories and only $132 million or 0.8 percent of total agricultural imports.
On the other hand, import tariffs for key Philippine exports will go down. According to the DTI, this is particularly important since a number of Philippine products will gain enhanced market access in terms of tariffs given the wider area covered by RCEP.
Among these products are canned tuna, coconut water, coffee, fruit cocktail, fresh papaya and durian, ignition wiring sets, leather goods, and bicycles.
The Philippines took a step closer to finally joining the world’s biggest free-trade agreement after the committee report on RCEP last week mustered the required signatures to bring it to the plenary meeting for discussion and final voting.